The Money Mustache Community
General Discussion => Welcome and General Discussion => Topic started by: nereo on October 29, 2019, 12:14:03 PM
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from what I've seen, the more savings one has, the more additional money it takes to have a sizable change in one's financial situation.
But it's not just about the total number of dollars in savings - expenditures (i.e. 'debt'), salary and lifestyle play a roll too. For example, a thousand bucks might have a big impact on someone who is low income and has little in savings, but that amount might not change a thing for a FIREe in the two-comma club.
Rather focusing on savings rate or % towards FI or similar metrics I'm curious where people stand on the "how much money would it take to move the needle" aspect.
EDIT: to respond to comments I've changed the larger categories. Also, the gist of the question is: "what amount would make you feel noticeably better off". Yes, it's subjective, and that's the point. Put another way, image you got an unexpected inheritance. What amount would make you go from "gee, that's nice" to "wow - this changes things!"
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I'd say you may need more choices on the high end to more accurately capture everyone. Thinking a majority on this forum are going to pick the highest option already.
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I don’t understand what you’re asking.
First off, are you asking about net worth or income over some time range (per year, per month, per week, etc.)
The other thing is what is meant by “sizable change to financial situation”... the point at which you stop stressing about money, or the point at which you consider money no object and you start to spend frivolously?
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With a sudden windfall of $25K, I could pay off all of my debts and actually start the countdown to RE.
I don't know that it would really impact my lifestyle at all, but it would definitely make me feel better.
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It would probably take roughly half a million to feel like we jumped from our current stage of the financial journey (very comfortable but still have to work) to the next (enough money to stop working whenever). Anything in between, while reducing the few required number of years of work remaining, would not make us feel noticeably different about our financial position.
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I'm FIREd, so another $100k probably wouldn't change anything. Another $100k would just change the odds that I'll need to cut my spending or go back to work from some unknowable % (maybe 5%?) down to a slightly smaller unknowable (4%?). So - even $100k doesn't do anything noticeable for me.
Now an extra $500k or million or something, that's so much that we'd really have to figure out if there's anything we want in life that we didn't budget for in our FIRE plans. I suppose we might buy a nicer house without neighbors nearby, or dump a bunch of money into our Donor Advised Fund. I suspect that distributing more substantial amounts of money to the charities we support might feel pretty good. But really we FIREd after we passed the point where we thought more money would improve our lives.
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I agree the question is too broad.
If I were to answer in the literal sense of "would I notice it if this amount appeared in my accounts?", the answer would be <$1,000. The other way I might look at it is "would I do something different tomorrow if it appeared in my accounts?", then it would basically need be enough to FIRE. Any amount between that and I would run the numbers and adjust my FIRE date.
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With no debt, low expenses, a solid net worth, and nothing we're saving up for other then retirement, 300-400K would be the only thing that would make a difference, since it would push us over the FIRE line. Anything else would just bolster our investments.
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About 2 years out from FIRE now, and $100k represents less than a normal year of gains at this point (unless it's a bad market year).
So really, anything under $100k doesn't really change much. Sure, $25k would mean maybe quitting two months earlier, but it's all kind of a wash at this point (OMY may take hold). A windfall of $300k (before taxes) means we consider pulling the plug as soon as possible after re-running the numbers. Anything else is kind of just gravy.
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I agree the question is too broad.
If I were to answer in the literal sense of "would I notice it if this amount appeared in my accounts?", the answer would be <$1,000. The other way I might look at it is "would I do something different tomorrow if it appeared in my accounts?", then it would basically need be enough to FIRE. Any amount between that and I would run the numbers and adjust my FIRE date.
Yeah, aside from what you have now, the other big variable is your financial goals. For some people, it might be getting out of debt, or taking more vacations, or a new car. Others might be saving up for a home purchase, etc. But for most people here, it's going to be achieving FI, and that's a rather large number by comparison.
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As someone starting out, an extra $100k today would nearly double my net worth but would only reduce my future working life by 11.3%, which doesn't seem too dramatic. On the other hand, I'm excited if I find $20.
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I chose $5k-$25k.
An extra $25k of income per year would move my FIRE date up 3 years, or would increase my 'stache by almost 70%. That would certainly be noticeable.
Funny enough, my partner makes almost exactly $25k per year more than I do. Maybe this exercise is an example to get her saving more...
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We are in a place where we are close to being able to live off of my DH's income, but it would be REALLY tight when it comes to house maintenance/needing a new car. So we are probably a few years away from me cutting back/quitting.
I chose 25-100k because I think if we came into 50k it would put us in a place where I could downshift. It would be enough money to replace our 14 year old car, replace our furnace, and put in a new fence (All the things that are on our to-be-replaced list for the next few years) with a bit more left over for emergencies.
Similarly, just under 100k could knock out our mortgage which would then free up that mortgage money to cash flow replacements.
When I first read the question I did think 100k+ would be my answer, but when I thought about it a little longer I realized that less than that would allow us to change our lives if we were brave enough to take the leap.
If this is an annual number as opposed to a one time - 5-25k would do us just fine. If DH made 10-15 k more we'd be set!
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After crossing the $0 mark in April and this week being the last week that I have debt, I would say that $25k-$100k would make me feel more stable in our financial life. At $100k, we would have purchased about three years of expenses if things were to go south. It would also cut down my timeline by a year or two which would help me frame my upcoming job search as finding either my last job or second to last job instead of having to continue building a resume.
So yeah, I think $100k would significantly change our situation positively.
Why do you ask?
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It would probably take roughly half a million to feel like we jumped from our current stage of the financial journey (very comfortable but still have to work) to the next (enough money to stop working whenever). Anything in between, while reducing the few required number of years of work remaining, would not make us feel noticeably different about our financial position.
+1
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$53k would pay off our mortgage. We have no other debt. With the mortgage gone, that would free up several hundred dollars per month that could be added to our investment accounts.
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None of those amounts would materially change anything -- none of them are enough to render me FI, so it'd just get dumped into VTSAX or used to pay for something.
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If you handed me $300k, I'd quit my job first thing in the morning. So I'm going with $300k ;).
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I'm $100,000 short of my goal so if I got anywhere close to that I'd retire. Otherwise it doesn't make too much difference.
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$250k more, I might seriously consider quitting. My DH wants me to quit anyway, because of my attitude since starting this job. I'm afraid I may never find anything else if I do. A little more net worth makes that not matter so much.
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$150k would buy me a part time seasonal work life. That's actually my goal right now! I dont really mind working so I'll probably never fully FIRE, I just want to work more on my terms. I'm sure my goal will change once that's achieved.
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What amount would “noticeably change my financial situation”?
We’re at $5m so to be honest, $50k or even $500k wouldn’t “change” anything
I think $2m would start changing things, although I obviously wouldn’t object to taking any amount of $
However having said that, I’m not sure what you’re getting at OP?
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A million dollars? I’m not sure what we change my life.
I’m already retired, dh will retire in 2 years, we’re debt free - money won’t really change anything.
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Agreed with everyone else, add a 0 to the last option and we'd be talking.
We inherited around 500k and just stuck in VTSAX and went about our business.
But I'm older and more solidified in my position, so the numbers need to be vastly larger to make a difference.
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I can't change my vote, but it would be 250k+. I'm already FIRE with a low WR. The one big unknown expense is long-term healthcare, and if things really go bad there, 100k won't be enough.
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I can't change my vote, but it would be 250k+. I'm already FIRE with a low WR. The one big unknown expense is long-term healthcare, and if things really go bad there, 100k won't be enough.
Can you update the poll to allow us to change our votes? Adding a category that is 250+ means that a lot of votes that were 100+ are now 100-249...
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I think it would need to be at least $500,000, and perhaps even more than that. I recognize that as an obnoxiously large number. But I'm not working and DH will likely work at least another 4 years for reasons outside money. By the time he gets to that point, we will be FIRE. An extra $100k, for example, means $4000 a year. I don't see that really affecting our lifestyle in a way that would feel significantly different. Probably an extra or longer vacation each year and increased charitable donations. At half a million and an additional $20,000 a year, things would change in a way that wasn't just a few more fun, but appreciated, things. Like taking a group of people we love on vacation every year, finding part of college for friends' kids, considering building a dream home from scratch, etc.
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$100-$250k would bring me to my FIRE number.
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I can't change my vote, but it would be 250k+. I'm already FIRE with a low WR. The one big unknown expense is long-term healthcare, and if things really go bad there, 100k won't be enough.
Can you update the poll to allow us to change our votes? Adding a category that is 250+ means that a lot of votes that were 100+ are now 100-249...
Apparently not. It seems all-or-nothing (delete and restart or let it run as is). Too bad...
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Noticeably is a pretty broad term.. We just crossed $500k last weekend and have been socking away $10k-$15k a month, so it would take a large amount to feel like it has an impact.
If I was given $500k tomorrow, nothing in my life would change. If I was given $1MM tomorrow, I still don’t think anything in my life would change (I’d probably replace our 20 year old Camry with either of those). My income is too high based on the work that I do that my savings is still growing so much faster than my investments would.
To quit my job tomorrow, I would need around $1.5MM to $2MM.
If my income was significantly lower, my answer would be very different.
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I took this as an amount of money yearly, as in a salary increase situation. I put $5-$25k because I am really happy for the most part with my current income, but that amount of money extra a year would increase my savings rate substantially since I make a pretty low ($38k/year) income right now.
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100K, I would set a quit date within a couple of months and start looking for a job immediately.
500K, I would quit, take a break, travel a bit and look for a job.
1M, I would quit and FIRE as this amount would bring me almost exactly to my FI number. I would consider some part time/contractual work down the road for a bigger buffer.
Ha, all scenarios revolve around quitting my job...
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I took this as an amount of money yearly, as in a salary increase situation. I put $5-$25k because I am really happy for the most part with my current income, but that amount of money extra a year would increase my savings rate substantially since I make a pretty low ($38k/year) income right now.
There is no mention of "annually" or "per year". I interpreted it to be a one-time lump sum.
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I took this as an amount of money yearly, as in a salary increase situation. I put $5-$25k because I am really happy for the most part with my current income, but that amount of money extra a year would increase my savings rate substantially since I make a pretty low ($38k/year) income right now.
There is no mention of "annually" or "per year". I interpreted it to be a one-time lump sum.
that was the intent, as referenced by the 'unexpected inheritance' example. It would be a much different question if it were "annually" (at which point I'd be a bit shocked that so many people responded >$250k).
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What a great question!
For me, having just-barely-maybe-not-quite lean-FIRE...
$5k would be a nice windfall, but wouldn't really make a huge difference.
$25k would be over a year's living expenses. I wouldn't change my lifestyle over it, though.
I voted for: $100k because it would instantly put me into completely FIRE territory, and I would start actively rearranging my life to have fewer employment-type commitments.
$250k would prompt me to start making a lot more travel plans, plus actively look for ways to use excess passive income for charity.
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250K would get me over the line.
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Came in to select the closest option to $500k. Was really surprised at how low the options were. Now, if you were asking how much of annual salary increase would noticeably improve things, then I'd think the current choices were reasonable options...
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I chose $25,000 to $100,000. We are currently trying to sell our house and need a certain minimum amount to be able to FIRE. But we hope that the house will sell for the named sum more than our minimum FIRE sum. That would mean that buying our home wasn't a super bad financial disaster and it would give us some more margin in our FIRE budget.
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I'm too early in the game for a smaller amount to really make a noticeable change. Drop a million on me and we'd be able to adjust our work schedules and dial back on our current savings rate. If we were closer to retirement, a much smaller amount would push us into making significant changes.
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I can't change my vote, but it would be 250k+. I'm already FIRE with a low WR. The one big unknown expense is long-term healthcare, and if things really go bad there, 100k won't be enough.
Can you update the poll to allow us to change our votes? Adding a category that is 250+ means that a lot of votes that were 100+ are now 100-249...
Apparently not. It seems all-or-nothing (delete and restart or let it run as is). Too bad...
Oh, that's a silly design!
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I guess 5000$ per month is ok for me :D
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If I suddenly came into 100k, we would buy more rental properties and one of us could quit work to manage them full time. It wouldn't be "retire to Bali" money, but it would be enough to rearrange our professional lives. One of us would still need to work for the healthcare benefits.
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$250k (about $325k Cdn) and I'd be aggressively pushing my DH to downshift immediately. I'm downshifted already.
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I wouldn't vote for an amount that pushes me over my FIRE number as I think much less would already 'noticably improve' my finances.
Current NW is slightly north of €50k so I voted €25-100k as another €50k would change things psychologically and be about 2y worth of savings (and 4 years of expenses).
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I'm too early in the game for a smaller amount to really make a noticeable change. Drop a million on me and we'd be able to adjust our work schedules and dial back on our current savings rate. If we were closer to retirement, a much smaller amount would push us into making significant changes.
Similarly, for those well past FI, even $250k would not be enough to make much difference.
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I'm lean FI, so an extra $250k+ would definitely change things for me quite drastically, in terms of available monthly funds to spend. I don't think it would change my lifestyle much/at all. Could opt for slightly nicer housing, and a bit more travel throughout the year.
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I'm past FIRE, and still working part time for interest. My wife still works full time. I don't think any of these categories would really change what we do much - since I quit working full time in 2017, my net worth has actually risen about $700k. I stress less about spending on things we enjoy, but we haven't made wholesale changes because of the money.
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With a sudden windfall of $25K, I could pay off all of my debts and actually start the countdown to RE.
I don't know that it would really impact my lifestyle at all, but it would definitely make me feel better.
Same here.
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USD 250k and we'd be in the 2 comma club in just stock/bond investments (brokerage and retirement accounts), not counting home equity and residential real estate holdings.
One parent might become SAHP or part-time consulting gigs, and spend more time on fitness activities.
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An unexpected windfall of 10-25k would make a big difference in short-term quality of life, as we would have the cash-on-hand to make some home improvements that we are currently delaying. It would not make a significant difference long term.
100k or more would make a significant difference to our savings, and would actually accelerate FI (not sure how much, I'd have to calculate it out).
To actually change our lifestyle significantly - I'm thinking allowing a SAHP when we have children - we'd need to be much closer to our FIRE number. Maybe 500k would get us to the point of being comfortable going to one income.
I selected 100k-250k on the poll, as that would be enough to make a long-term improvement in our situation.
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Very interesting question! It was fun to think about. I think somewhere around $75-100k would be our line. In that case, we'd be in territory for a good down payment and some "shit happens when you buy a house" buffer fund territory, so we'd probably move ahead with buying a house again much sooner than otherwise.
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I selected over $250k. That would make us immediately comfortably FI.
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$80k would allow me to do any of the following, all of which are a big deal:
- Pay off low-interest student loan and mortgage, which would make me debt-free.
- Invest it to gain over $300 a month, which replaces my roommate.
- Invest it but keep the roommate, and FIRE over 2 years earlier.
I'd probably pick the second.
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$80k would allow me to do any of the following, all of which are a big deal:
- Pay off low-interest student loan and mortgage, which would make me debt-free.
- Invest it to gain over $300 a month, which replaces my roommate.
- Invest it but keep the roommate, and FIRE over 2 years earlier.
I'd probably pick the second.
Says a lot about your roommate ;-)
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That question takes me back 20 years to when my parents gave me and my pregnant wife something around (cant remember exactly) $1k to pay our rent for the month after my temp job had ended and my wife had been laid off.
If I hit a $1M lottery today it would not change my life nearly as much as that $1k did then.
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Says a lot about your roommate ;-)
Sure does!
...what does it say?
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To be "wow, that changes things" at least $5 million, maybe 10. That would have me always flying first class and inviting a sister to come free on vacations that DH didn't want to go on.
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I would take anything lol
If I had in the 75K territory, I couldn't quit my job or anything, but all my debts would be paid off including my house plus have a healthy emergency fund. So while my life wouldn't change, def some peace of mind.
For me to go part time, I would need say another 300K in retirement funds. To fully quit, I don't know but a lot (I am risk averse and even going part time would increase my QOL to the extent I may not want to retire from work).
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I'm not sure if any amount of money could make a difference. But, if you could give me guaranteed health insurance not in an HMO network that I can choose whoever I want to see, whenever I want, that would make a difference. No matter how much money you have, you can't get a good individual plan in my state.
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Every $1000 bill helps, but a milestone event would be the ability to pay off my mortgage $480K, which in turn means I would not have to sell the house, move out of California, and to a LowerCOL area when I retire, so I'll go with $300K. The rest I could swing myself.
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I picked 100k to 250k, because I could pay off my home with 200k. That would noticably improve my budget/savings rate and thus my financial siutation. Any amount under that would also probably just go towards paying off my house.
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We are fat FIRED with no debt, so none of the choices would "noticeably" improve our situation. $250k would provide another $800/month indefinitely. I wouldn't turn it down, of course, but it would probably just mean more charitable giving.
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With a sudden windfall of $25K, I could pay off all of my debts and actually start the countdown to RE.
I don't know that it would really impact my lifestyle at all, but it would definitely make me feel better.
Same here.
Also same here. I picked 5k to 25k because I have just under 25k of student loan debt left, and anything that lets me quash off a good chunk of that would make a real psychological difference (and, you know, seriously help open up cashflow for investments!).
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In order to matter in the short term probably 500k.
But realistically any amount will impact the longer term, it just depends on what "noticeably improve" means ;-)
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250k would let me retire 2 years sooner so I guess that would be a 'noticeable' improvement.
Besides pushing forward my retirement date, I don't think any amount of money would change my lifestyle, since I already buy everything I want. I suppose if I got a huge amount of money, say $20 million, I'd probably hire a personal chef, a personal driver and someone to follow me around with a fan all day, but I can't think of anything else I want that I don't have or don't plan to have.
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400k because thats the difference between the house we live in now and the house were moving in. This way all my withdrawals and stuff could remain the same. Basically a push other than house (paid for) being 25% of over all portfolio vs 10%
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With a sudden windfall of $25K, I could pay off all of my debts and actually start the countdown to RE.
I don't know that it would really impact my lifestyle at all, but it would definitely make me feel better.
Same here.
Also same here. I picked 5k to 25k because I have just under 25k of student loan debt left, and anything that lets me quash off a good chunk of that would make a real psychological difference (and, you know, seriously help open up cashflow for investments!).
Same - I took the question in a 'mental health about your financial situation' type of view. Coming into a five figure amount with no strings attached would be pretty rad! Emotionally, the positive uptick might wear off before too long but I think it would be noticeable that something good had happened.
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$25-$100k would noticeably change it to me. For it to be noticeably different to others would probably be more like $500k.
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To be "wow, that changes things" at least $5 million, maybe 10. That would have me always flying first class and inviting a sister to come free on vacations that DH didn't want to go on.
+1
We're already so close to the dollar figure that we need to have my vision of a fat FIRE, that it would take a significant amount to really make a difference. I like the idea of treating folks to vacations....and I'd want to pay off my brother's and niece's mortgages (not big amounts) and gift equivalent to nephew.
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I'm at the point where $10k would pay off all my debt and free up a little money each month for me to do what I want with. Aside from that, if we're being honest, what I want to do with my money is save it. Maybe travel more. Since I'm finally at the point where I'm maxing out tax-advantaged accounts and sticking a little aside in my taxable account and still have the money to buy the things I "need" and take a cool vacation every 18 months, it would take a fairly large sum to make any major changes to my situation. Like enough to get me to FIRE. Such is life in the boring middle...
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I have ten dollars in cash with me today, so $1 would make me feel "noticeably" better off.
What windfall would cause me to change my future plans? I guess five or ten million, after tax.
Is that what you are asking? Why?
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$250k+ in retirement accounts would change nothing for us right now. Someday, years in the future, it could represent a nice bump in our retirement income, a lower WR, or a slightly earlier exit.
I chose $25k-$100k in the poll. We could pay off our mortgage, fully fund a variety of replacement accounts (roof, HVAC, driveway, car, appliances, etc.), bolster the 529, and then start an earlier downshift before FIRE.
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It's interesting how nearing the FIRE finish line changes the game... For folks with negative net worth, achieving $0 net worth is a mountain. For folks with $3M in the bank, it's maybe another $Million... Improving a financial situation by reducing lifestyle and cutting monthly overhead costs has been the most noticeable way to improve situation... Truly a dollar saved, is worth another $1.40 in your paycheck.
For me, it's ~$300K after tax (again, this would be HUGE to someone early in the FIRE journey, but is now our last "chunk" remaining to FIRE and a smaller % of net worth). But the result will be the most dramatic change possible of stopping work that over time I've come to hate, and moving to a part time "what I want, when I want" type of role on things I really care about. Fortunately, this is on track...
@nereo, Curious what your vote was? Guessing you're not worried about a number, but curious about the forum worth-o-graphic?
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It's interesting how nearing the FIRE finish line changes the game... For folks with negative net worth, achieving $0 net worth is a mountain. For folks with $3M in the bank, it's maybe another $Million... Improving a financial situation by reducing lifestyle and cutting monthly overhead costs has been the most noticeable way to improve situation... Truly a dollar saved, is worth another $1.40 in your paycheck.
For me, it's ~$300K after tax (again, this would be HUGE to someone early in the FIRE journey, but is now our last "chunk" remaining to FIRE and a smaller % of net worth). But the result will be the most dramatic change possible of stopping work that over time I've come to hate, and moving to a part time "what I want, when I want" type of role on things I really care about. Fortunately, this is on track...
@nereo, Curious what your vote was? Guessing you're not worried about a number, but curious about the forum worth-o-graphic?
I have noticed myself looking at $100 items and thinking *that's not so expensive", when 3 years ago, a $100 BBQ grill may as well have been a $500 grill, because my budget was free-or nothing. I think it has to do with the relative sizes of absolute values vs percentages-- out of a $100 budget, $50 is an absolutely critical, life-or-death percentage; but out of a $1,000 budget, $50 is only 5%, which is material but not critical; out of a $10,000 budget, $50 is pocket change; and out of a $100,000 budget, $50 is essentially a rounding error.
I am so glad I have been able to live frugally and make this work on a low income-- it makes me appreciate how really well off I am that it'd take tens of thousands of dollars to move the needle for me-- even though I still am technically low-income, it doesn't feel like it now, and it's weird to feel rich all the time. I've managed to move up a social class, and sometimes feel a bit lost, as I'm still living the drive-for-FI lifestyle and habits. Before all my investments started paying off, it was pretty easy to relate to "the struggle" of other low-income people (even though I was still saving >50%), but in about another year, I'm going to finish the house remodel and be living the sweet part-time life in a 2400ft² fancypants house with a nice yard and looking to invest somewhere else to generate even more passive income.
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I'm FIREd, so another $100k probably wouldn't change anything. Another $100k would just change the odds that I'll need to cut my spending or go back to work from some unknowable % (maybe 5%?) down to a slightly smaller unknowable (4%?). So - even $100k doesn't do anything noticeable for me.
Now an extra $500k or million or something, that's so much that we'd really have to figure out if there's anything we want in life that we didn't budget for in our FIRE plans. I suppose we might buy a nicer house without neighbors nearby, or dump a bunch of money into our Donor Advised Fund. I suspect that distributing more substantial amounts of money to the charities we support might feel pretty good. But really we FIREd from one walmart (https://walmartone.onl/onewalmart-login/) after we passed the point where we thought more money would improve our lives.
I am going through the same situation
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$100K for me, but that's more on a subjective level. I plugged it first into my real estate portfolio and then into my pretax bucket. It moves my FI date by several months, so not a huge game changer, but $100K is an emotionally meaningful amount to me.
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$100,000 - $250,000 would make me comfortable to cruise-FIRE. I'd go part-time immediately and would remain part-time until I was FIRE (which would take around 15-20ish years).
Without this windfall, I still need to save aggressively for another few years before I get to that point!
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$25- 100K.
That would be enough for a down payment for a house or a business if financed with an SBA loan. $100-250k would make a very substantial change, but even $25-100k would "noticeably improve" our financial situation as it would increase our net worth by 50-100% .
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I have ten dollars in cash with me today, so $1 would make me feel "noticeably" better off.
What windfall would cause me to change my future plans? I guess five or ten million, after tax.
Is that what you are asking? Why?
Follow up:
A number of people have asked about the reason for this post and my response (@Money Badger @norajean). I wanted to wait to respond for a bit to see how others would vote, as to no
I explained a bit on my OP, but the kernel of the idea is that most people (and particularly non-mustachians) seem to think a shockingly small amount of money would make a big difference in their financial situation, and that seems to scale with both their income and their net-worth. Talk radio games, scratchers, community raffles give out prizes of $500-$5k and I've been struck at how many recipients talk about what a huge difference it made in their lives (albeit typically much shorter lived than they might think).
I was curious how a community focused on early retirement might think about an unexpected windfall
Thoughts: Overall most people who responded said nothing less than 6-figures would noticeably improve their situation. This makes sense for those who are at or near RE, as $100,000 is just a small change in a WR if you've got a portfolio of >>$1MM. What's surprised me is how many respondents who are fairly early in their savings still chose very high dollar amounts. In a way it's comforting, as there is a focus on long-term planning. But the high dollar amoutn did surprise me. To use our own situation as an example, we are roughly halfway to your "FI-Number", yet I chose $25-100k, and my exact number would be somewhere around $60-75k. Why? Because with lower incomes we can manage to squirrel away roughly $15k per year. So even though such a windfall would just get invested according to our IPS, it would represent 4-5 years of savings, and shave even more years off our required working timeline. But even more importantly it would push us further into the wave where future contributions would start meaning less to us than market forces. Which in turn would mean we could re-think whether we both needed to work and pay childcare.
anyhow, thanks to all who have participated thus far.
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We recently bought our retirement home at the beach in FL for a decidedly unmustaschian price. My wife agreed to return to work for two years to pay down the new mortgage and a third year go get her boat (house has a nice dock.)
About $150k would allow me to stop working Jan 2021 when I rejoin her in FL and go a long way to paying off the mortgage. It is a beautiful house and we can walk to the beach or get to the cruise ships in under a half hour. The windfall may come from the buyout of an investment we made in a local distillery several years ago and/or an inheritance. I don't expect (or hope in one case) that either will occur soon.
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It shouldn’t be surprising that, for a person who has more, that it would take more to “noticeably improve their financial situation”. The more one has, the more it would take to noticeably improve. Vice versa
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We're retired with a good sized stash and income. So, honestly, we don't need the money.
An extra $50k would fund renovating two houses I'm funding now, so that would make me happy.
An extra $147k would pay off our 2.75% mortgage on our home, which would make me happy, even if it would be "better" to invest that money.
An extra $1M after the above two items would go to a non-profit foundation we would set up to fund halfway houses for foster kids aging out of the foster system or low-cost housing for college students. That would let us do a house every other year at current prices. More would let us do more.
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Around 50 000 would make it easy to buy a house (with a mortage) that we would like to live in, perhaps even in an ideal location compared to "wherever we can afford to buy a house" so I picked the 25 000 to 100 000 category. 400 000 would allow us to buy a house without a mortage.
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I guess 100k+ but really that would just make us feel richer. We have plenty of money now. But h dislikes his job and that would be enough cash sitting in the ban the bank for him to say F it and quit.
But a year from now? Meh. We wouldn't notice the blip.
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It's interesting how nearing the FIRE finish line changes the game... For folks with negative net worth, achieving $0 net worth is a mountain. For folks with $3M in the bank, it's maybe another $Million... Improving a financial situation by reducing lifestyle and cutting monthly overhead costs has been the most noticeable way to improve situation... Truly a dollar saved, is worth another $1.40 in your paycheck.
For me, it's ~$300K after tax (again, this would be HUGE to someone early in the FIRE journey, but is now our last "chunk" remaining to FIRE and a smaller % of net worth). But the result will be the most dramatic change possible of stopping work that over time I've come to hate, and moving to a part time "what I want, when I want" type of role on things I really care about. Fortunately, this is on track...
@nereo, Curious what your vote was? Guessing you're not worried about a number, but curious about the forum worth-o-graphic?
Off topic - just wanted to let you know that someone has trademarked your name.
https://profootballtalk.nbcsports.com/2019/11/03/michael-badgley-trademarks-money-badger-nickname/
I'm not entirely sure how this stuff works but since he's not involved in personal finance, you may still have claim to it :)
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So I entered a free roll football contest, and if Dallas wins today I have a good shot at winning $1000. I am positively giddy about this. Should I revise my number down from $250k? : )
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So I entered a free roll football contest, and if Dallas wins today I have a good shot at winning $1000. I am positively giddy about this. Should I revise my number down from $250k? : )
Apparently not unless it would register as something other than a blip in your finances.
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In the process of moving into a new house that we just bought and selling a different one. The $25,000 wouldn't have affected which house we chose. $100,000 might have. I still have to smack my PJM when I think about the houses that were available for an extra $100,000.
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So I entered a free roll football contest, and if Dallas wins today I have a good shot at winning $1000. I am positively giddy about this. Should I revise my number down from $250k? : )
Good luck, I like your odds. Is the "good shot" based on a total score tiebreaker?
By this metric my answer might be more like a quarter though. It makes me irrationally happy to find a quarter on the ground. And I say irrational not because it makes me super happy, but because it should have essentially no impact on my mood. All the quarters I'll find on the ground during my lifetime probably won't add up to the cost of a restaurant meal.
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So I entered a free roll football contest, and if Dallas wins today I have a good shot at winning $1000. I am positively giddy about this. Should I revise my number down from $250k? : )
If I found a $10 bill on the sidewalk, I'd be pretty happy. That's not quite the same as "noticeably improving my financial situation" though!
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So I entered a free roll football contest, and if Dallas wins today I have a good shot at winning $1000. I am positively giddy about this. Should I revise my number down from $250k? : )
Good luck, I like your odds. Is the "good shot" based on a total score tiebreaker?
Yes. Right now I have guessed all games correctly. If others have also guessed correctly it will be based on the total score of tonight's game. 42 is my number. The top 30 winners usually get something between $100 and $1000.
I agree about found money. A quarter can (irrationally) make my day.
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So I entered a free roll football contest, and if Dallas wins today I have a good shot at winning $1000. I am positively giddy about this. Should I revise my number down from $250k? : )
Good luck, I like your odds. Is the "good shot" based on a total score tiebreaker?
The answer is 42, so you are SET.
Yes. Right now I have guessed all games correctly. If others have also guessed correctly it will be based on the total score of tonight's game. 42 is my number. The top 30 winners usually get something between $100 and $1000.
I agree about found money. A quarter can (irrationally) make my day.
The answer is 42, so you are SET.
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10k+
I save $15k in a year so that's 6-9 months of savings :)
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It just occurred to me that Prospect Theory may explain many of the responses to this intriguing question. See https://en.wikipedia.org/wiki/Prospect_theory (https://en.wikipedia.org/wiki/Prospect_theory)
The value function is highly non-linear. In particular, the convex nature of the curve suggests that as wealth increases, the amount of money you need to increase the perceived value increases much more.
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Working on the assumption that my answer is given in cash (or some other highly liquid asset), 25k-100k
This would allow me to buy my own place within one year of accepting an average entry position.
Below that it would take years of saving, which is also what it would take if I didn't get free money out of nowhere.
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I chose $100k-$250k. That would allow me to go part time when the opportunity becomes available.
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It just occurred to me that Prospect Theory may explain many of the responses to this intriguing question. See https://en.wikipedia.org/wiki/Prospect_theory (https://en.wikipedia.org/wiki/Prospect_theory)
The value function is highly non-linear. In particular, the convex nature of the curve suggests that as wealth increases, the amount of money you need to increase the perceived value increases much more.
I wonder if the average Mustachian personality wouldn't be much more sensitive to small wastes of money, i.e. Losing $30 needlessly would dramatically decrease my psychological satisfaction.
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It just occurred to me that Prospect Theory may explain many of the responses to this intriguing question. See https://en.wikipedia.org/wiki/Prospect_theory (https://en.wikipedia.org/wiki/Prospect_theory)
The value function is highly non-linear. In particular, the convex nature of the curve suggests that as wealth increases, the amount of money you need to increase the perceived value increases much more.
I wonder if the average Mustachian personality wouldn't be much more sensitive to small wastes of money, i.e. Losing $30 needlessly would dramatically decrease my psychological satisfaction.
In general humans are more sensitive to loss than gains (roughly 3:1 IIRC). As an anal-retentive optimizer it drives me bonkers when I find unnecessary leakage in my budget, like when I failed to notice that one of my bank accounts had changed their terms and started charging me $3.95 every month. It wasn't very frequently used, so it took me a few months to catch on. In the end I lost maybe $12-15, but I was mad as hell - mostly as myself - for allowing it to happen. That same time period the markets raised our NW by an additional $5k or so, plus another ~$3k of our additional contributions.
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Yes. Losing $100 upsets me more than winning $1000 would please me. That's messed up.
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Yes. Losing $100 upsets me more than winning $1000 would please me. That's messed up.
I actually wonder if this is why so much FIRE material focuses heavily on the spending side and not as much on the saving side.
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Yes. Losing $100 upsets me more than winning $1000 would please me. That's messed up.
I actually wonder if this is why so much FIRE material focuses heavily on the spending side and not as much on the saving side.
Maybe. But I think the idea of losing money evokes a very different emotion than the idea of spending it. Some people actually enjoy spending money.
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There was a similar thread not too long ago and I answered along the lines of something like 60ishK would noticeably improve my situation because that's what I had left on my previously mortgage sized student loan.
Well, I just profited 60ishK from selling my townhouse.
Neat-o.
The impact is profound as without my minimum payments, this cuts our baseline annual spend in half.
This allows me to make a major career shift that I would have had to wait on because it will take a few years to build up the work, and I didn't want to risk an unpredictable and substantial drop in income while still servicing 3K/mo in payments on an already highly variable self-employed income.
I gave my 3 month notice (normal in my industry) that I'll be dropping down to very limited services at my main job, only one day a week.
So yeah, how's that for a concrete, real life answer to a theoretical question?
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That 3:1 may be an average across all humans. Among MMM crowd, it could be different. Way different.
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This poll also depends on where the money comes.
$100k-250k in cash would immediately change our situation. In our pretax IRA? not as much.
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That 3:1 may be an average across all humans. Among MMM crowd, it could be different. Way different.
Yes, it's definitely an average. Some people have very little problem with loss - others experience one bad event and are scared for life.
It's used to explain why so many people avoid investing in the market after a big loss, up until there's been a huge run-up, at which point they are tempted to finally dip a toe back in (basically resulting in 'buy high, sell low' results).
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Would love to pay off our mortgage. That's our only debt. It would still take a fair bit of additional money to fund FIRE as we had a late start in professional life. In the end we'll be comfortable but we won't RE earlier than about 60.
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This poll also depends on where the money comes.
$100k-250k in cash would immediately change our situation. In our pretax IRA? not as much.
This is so true. Another $16k in retirement year before last would have meant nothing in terms of day to day life. But my grandma gifting that in cash toward our second IVF cycle? Very different situation.
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Yes. Losing $100 upsets me more than winning $1000 would please me. That's messed up.
I actually wonder if this is why so much FIRE material focuses heavily on the spending side and not as much on the saving side.
That's probably a small piece of the puzzle, but the more important reason why spending is a bigger focus is that, based on the 4% rule, spending $1 less in one's annual retirement budget reduces one's savings needs by $25. That's on top of boosting one's annual savings amount by $1 (assuming it's also trimmed from the pre-retirement spending budget), leading to $102 saved after 30 years at 7%, which will generate another $4/year in available income.
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In the near-term, it would take quite a bit for me to notice a change. I'm currently in a phase of life where things are relatively stable and the primary goal is just saving to reach my FI number. Until that point, my financial situation will remain pretty much the same.
From a long-term view, any additional money I stumble across now gets thrown into savings and brings FI closer so while I may not notice an improvement today, I'll see some benefits later.
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Right now, to 'noticeably improve' our situation would mean cutting a year (or more) off of our working time. Since we have elementary-age kids and are planning to relocate, the FIRE target date is somewhat dependent upon school calendars. Right now, the goal is two more school years (including the current one). A tax-free windfall of ~$200k would most likely allow us to trim that to just finishing out this year.
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To make a significant change would be enough to pay off the mortgages on our investment properties. $800K AUD. But realistically, enough to pay off even one of them would allow us to snowball the next so much quicker. Maybe $160K then?
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My plan as a government employee is based on working long enough for PSLF as well as being pension vested.
To give that up and quit today would require a lot more than $250k.
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My wife tries to be frugal, but she has her vices. An extra $2,000-$3,000 would probably add one more Disney World trip to the calendar.
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Modified the above:
25K, Would get rid of car loan/student loans. Free up a ton of investment, less burden of "if I got laid off and couldn't find a job" back of mind
100K, I would set be able to quit in 12 years instead of 14.
500K, I would quit, take a break while doing paternity leave for 6 months and look for a job. It's about half my FIRE # but I would save $8k in daycare over 6 months.
1M, I would quit and FIRE as this amount would bring me almost exactly to my FI number. I would probably be the default stay at home dad but probably still do daycare part-time to pursue other activities
(Let's be real, scenarios above are if the money went into my retirement accounts and wife would have a big say and she would be the one taking leave and I'll be working.)